Barclays Bank Error In Your Favour - Collect £100M

I see that Barclays is fond of playing Monopoly, and has managed to create a bank error (for once in its customers' favour) that will entail a refund to affected customers (estimated at being around 300,000) of around £100M.

Barclays customers are to receive compensation because it miscalculated the interest owed on personal loans, the errors date back to October 2008.

Other divisions (Barclaycard, Barclays Wealth and Barclays Corporate) are now undertaking a review to see if customers were short-changed by the errors ("technical documentary errors").

Barclays will write to customers in the coming weeks. Barclays is quoted by the Telegraph saying that said it had "identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts. It is therefore implementing a plan to return interest incorrectly charged to customers".

A spokesman for the bank said:

"Barclays has proactively reviewed information it has historically sent to its customers relating to interest charges, where we have found technical documentary errors. As a result Barclays has identified certain issues with the information contained in some statements and arrears notices relating to consumer loan accounts. 

Due to these notification errors, interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned. No customer will pay more than they were ever contractually expected to. 

Barclays has notified the Office of Fair Trading (OFT), which is responsible for consumer credit issues, and is implementing a plan to return interest payments to customers as swiftly and efficiently as possible. Barclays is undertaking a review of all its businesses where similar issues could arise to assess any related issues. 

Any affected customer will be contacted by Barclays and customers do not need to take any action."

To add to Barclays shame, campaign group Move Your Money said that Barclays was the lowest scoring financial institution out of 70 assessed, scoring four out of 100 possible points for honesty and customer service.

Well done Barclays!

Wheatley Lambasts Outrageous PPI Mis-selling

Martin Wheatley, the CEO of the Financial Conduct Authority (FCA), is currently appearing before the Treasury Select Committee. He is less than impressed with the fallout from the PPI mis-selling scandal and the way that the banks are handling complaints.

Currently the FOS is upholding 90% of PPI mis-selling cases referred to it after they had been rejected by the banks.

Wheatley says it is "absolutely not acceptable" and that it is "outrageous" that the number upheld by the FOS is so high. He stated that the FCA has been looking into how banks handle complaints, as per the Telegraph:

"We have taken action and we will take more action and we will continue to look at how banks handle complaints. 

We've got two large investigations underway and have two cases where we have issued strong fines."

Sadly PPI mis-selling is but one of many areas where Britain's financial services industry mired itself in its own shit.

TSB Website Crashes

The newly launched TSB bank (split for Lloyds) has had a less than stellar first day, as its website has crashed.

Hardly a good augury for the future!

Fred The Shred and The Round Topped Filing Cabinets

The Telegraph reports that Fred Goodwin, erstwhile CEO of RBS, was so obsessed with tidiness and so irritated with piles of paper on filing cabinets that he ordered thousands of custom-made round-topped storage units to be rolled out across the bank.

A senior manager told Iain Martin, the author of Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy being published next week.

“Somewhere in a warehouse are thousands of old flat-top RBS filing cabinets that were not Fred-compliant.” 

In pre RBS days as chief executive of Clydesdale Bank, Goodwin apparently interrupted a meeting to take a call from his mother who had seen a cigarette butt left on the steps of the bank’s headquarters in Glasgow. Goodwin immediately arranged to have the butt removed.

Sadly this obsessive attention to detail didn't manifest itself in the more "mundane" activities of the bank such as credit, risk and how much is lent and to whom.

Banks Embroiled In Another Mis-selling Scandal

As loyal readers know, I have on numerous occasions noted that the financial services industry in the UK has tarnished its image because of its greed and corruption, and seems intent on bringing about its own self destruction.

Today we see yet another example wherein its greed has been exposed because of yet another mis-selling scandal.

This time the mis-selling relates to card protection and identity theft insurance products by CPP Group. The BBC reports that UK banks have agreed to set up a £1.3BN fund to compensate the victims.

The Financial Conduct Authority (FCA) said that customers had been "given misleading and unclear information about the policies".

CPP Group and 13 banks and credit card firms will pay for the compensation.

Some seven million customers could now expect to receive letters from CPP from 29 August 2013, explaining how to claim compensation. Victims will receive 8% interest on the amounts being reimbursed.

During the period of mis-selling between January 2005 and March 2011, CPP sold 4.4 million policies and generated £354M in gross profit. A further 18.7 million policies were renewed during the same period, generating an income of £656M.

Many customers were put in contact with CPP when they rang a number on their new bank card in order to activate it. Many thought they were talking to their bank, but they were in fact being put in touch with a salesperson from CPP.

CPP then used the opportunity of the call to offer card protection insurance. If the customer bought the product, the bank got a commission.

CPP Group sold a card protection product costing about £30 a year, that was designed to cover losses if a card was lost or stolen. It said customers would benefit from up to £100,000 of insurance cover, but customers were already covered by their banks. Generally, cardholders are not liable for unauthorised card payments on lost or stolen credit and debit cards; ie the product was unnecessary.

Needless to say we can expect to see the "ambulance chasing" financial compensation firms jumping on this bandwagon and offering to reclaim victims' money back in exchange for a percentage; which of course is completely unnecessary,as the victims can reclaim the money themselves.

Banks Play The Old Switcheroo

Banks and building societies are begrudgingly upping one very modest aspect of their customer "service"; namely that of guaranteeing to switch customers' bank accounts and direct debits (if requested) within seven working days as from September 16.

The Telegraph reports that 33 banks and building societies have signed up to the agreement, which will cut the length of time it takes to move accounts from up to 30 working days to seven working days.

Customers will be refunded interest and charges if anything goes wrong.

Whilst banks are offering cash incentives to people to switch their accounts (usually £100-£125) there is of course a sting in the tail; customers have to shut down their old current account if they choose to avail themselves of this guarantee (customers are entitled to opt out of it and manually change their accounts and payments).

As to whether this new guarantee improves the level of customer service wrt bank charges, products, rates etc remains to be seen; given that the banks operate in their own interests, rather than in the interests of their customers, any dramatic improvements in customer service are unlikely to see for quite some time if at all.

Local Lending Data For 10,000 Postcodes

The government have announced that the UK’s biggest lenders will reveal how much they lend at a local level across 10,000 postcodes.

The new data, published for the first time by the end of this year, will allow businesses and the public to see how the banking and building society sectors are serving the wider economy, and in what areas of the UK there less lending.

The data will be published by the British Bankers’ Association (BBA) and the Council of Mortgage Lenders on a quarterly basis and show the outstanding stock of lending that has been committed to customers across three categories:

• loans and overdrafts to SMEs
• mortgages
• unsecured personal loans (excluding credit cards)

Each postcode will be broken down by category to show the exact lending being made to each.

All very well maybe, but why delay it until the end of the year?

Careless Talk Costs Dollars

The Australian Dollar plunged to a three year low following a "light hearted slip of the tongue" by Glenn Stevens the Governor of Australia's Reserve Bank.

His crime?

In a "Ratner" moment Mr Stevens said in a speech on Wednesday that the bank’s board “deliberated for a very long time” before leaving the cash rate steady at its monthly meeting on Tuesday.

This comment caused the dollar to drop to US90.37 cent, and prompted some bank economists to change their forecasts and predict an interest rate cut in August.

In a damage limitation exercise the Reserve Bank insisted that the comment was “light-hearted”, this in turn lifted the dollar and prompted banks to withdraw their revised forecasts.

The bank’s deputy governor, Philip Lowe, was quoted by the Telegraph saying that the financial markets and the media had “misinterpreted” the comments, which were not supposed to be taken seriously.

"They were meant to be a light-hearted remark after what, he [Mr Stevens] reports to me, was a very light-hearted introduction.

I can confirm for you that the board did deliberate for a very long time. I can also confirm for you that it always deliberates for a very long time.”

Professionals such as Mr Steven should know that financial markets do not posses a sense of humour, especially in the current febrile atmosphere!